Category Archives: Economics

Quote of the day–Dmitry Orlov

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In the United States, the agricultural system is heavily industrialized, and relies on inputs such as diesel, chemical fertilizers and pesticides, and, perhaps most importantly, financing. In the current financial climate, the farmers’ access to financing is not at all assured. This agricultural system is efficient, but only if you regard fossil fuel energy as free. In fact, it is a way to transform fossil fuel energy into food with a bit of help from sunlight, to the tune of 10 calories of fossil fuel energy being embodied in each calorie that is consumed as food. The food distribution system makes heavy use of refrigerated diesel trucks, transporting food over hundreds of miles to resupply supermarkets. The food pipeline is long and thin, and it takes only a couple of days of interruptions for supermarket shelves to be stripped bare. Many people live in places that are not within walking distance of stores, not served by public transportation, and will be cut off from food sources once they are no longer able to drive.

Dmitry Orlov
February 13, 2009
Social Collapse Best Practices
[It’s harvest time on the farm. I’m going to visit and drive combine for a while. It’s been a couple years since I did that and it’s time to satisfy that urge again.

The farm visit reminded me of the above quote. We do burn lots of fuel on the farm and of course the fuel consumption is far from over by the time the crop is delivered to the grain elevator in town.–Joe]

Quote of the day–George Bernard Shaw

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Hell is paved with good intentions, not with bad ones. All men mean well.

George Bernard Shaw
See also here, for further background on this phrase. The original was not “The road to hell is paved…” but Hell itself that was paved.
[I’m thinking gun control, TSA, socialized medicine, “affordable housing”, “hate speech” laws, rent control, the list is, for all practical purposes endless. See also New Deal or Raw Deal?: How FDR’s Economic Legacy Has Damaged America.

I just bought Bat Out Of Hell so I could play it while posting this and doing my dry-fire practice.–Joe]

Things I Don’t Understand #876,394.1

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Why is it that every printer ever made has User Frustrator Tabs (UFTs) built into the paper tray?  Their only function is to prevent the user from sliding a new stack of paper into the paper tray.  They’re there to catch the corners of the paper as you’re trying to get it into the machine, thus causing one or more sheets to bunch or shift inside the tray.  Often it’s the bottom sheet that gets hung up, and of course it’s impossible to slide the bottom sheet forward under the stack, even without UTFs, unless you remove the whole stack and try again.  UFTs work especially well when you have an important customer on the phone and you’re in a hurry to print something.  Of course the printer never knows that you’ve just installed a new, crumpled stack of paper in it, so while you’re on the phone you have to find the right button to push, telling the printer it is now time to jam and wad a new sheet in its mechanism.

I can just see Butters, in his aluminum foil Professor Chaos uniform, evil grin on his face, as he builds the CAD file for the new HP paper tray; “He he he heeee.  Now the world will know the pain and frustration….”

Hey guys; ever though of having, you know, flat, smooth surfaces inside the paper tray?

#876,394.2;

Why is it that the printer and camera manufacturers actually hire (and presumably pay) extra people to write software, and then actually include it in their product packaging, just to take over my computer, turning it into an All-HP Fun House, or the Wonderful, Lollipop World of Cannon, instead of the computer I actually liked and paid for?  It’s like putting dog turds in your product packaging.  You hire people to search for dog turds, you hire people to wrap those dog turds, and then you pay to ship those dog turds with each camera or each printer, so that I’ll stick one in my optical drive and ruin everything, permeating my whole computer.  Gee, thanks.  All I wanted to do was print stuff, OK?  How hard is that to understand?  All I want to do is take pictures and put them on my computer.  Why does that require special dog turd software?  You know what I do?  I pull the card from the camera and use a damned card reader, ’cause that way I know I’m not sticking yet another dog turd in my optical drive.

(go ahead– ask me how I feel about it)

Mike Lux report

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A few days ago I reported I might have a chance to ask Mike Lux a a question or two. I got my chance last week and reported via Twitter here, here, here, here, here, and here.

The Twitter posts are below, indented, and in italics:

At the meeting room to hear Mike Lux speak. He should show up in a few minutes. Wearing my Rearden Steel t-shirt. World War Z on my Zune.

Rearden Steel is a little obscure. But it has a very significant meaning. I chose that shirt very deliberately. I’m pretty sure it was lost on everyone at the meeting but it made me smile.

World War Z just happened to be what was next in my queue for listening material but I thought it appropriate listening when about to subject myself to such a “progressive”.

Lux says, “I believe the economy is fundamentally broken.” “We are on the verge of a great change if we embrace it.”

He talked of great moments in history such as the 1930s with the “New Deal” and the 1960s with the “Great Society” and civil rights legislation. He was disappointed with the Clinton administration that they didn’t seem to have an real direction or make any progress. Now we have a chance to make some progress if we can just get our act together.

I still get a chill going through me when I think about this. Could it be our financial crisis was very deliberately brought on to make it more likely that socialism will be accepted by U.S. citizens? I had sort of half thought that this might be the last straw and people would have their complete fill of socialism and embrace the free market and our constitution as a result of our current situation. Can’t people see that the Obama administration is only making things worse? Or will they be convinced that only he and socialism can save them?

Brrrrr… the chills that gives me.

He talked for quite a while about all the Bill of Rights violations by the Bush administration and expressed some concern President Obama wasn’t moving fast enough to correct them.

I asked him to address his concerns over BOR violations by conservatives versus progressives ignoring the 2A and 10th.

I was the last person called upon. There were to be no more questions after mine.

His response was, “We just have a different interpretation of the BOR.”

He also said the the government has the “right” to “invest” in the economy and “reform” health care via regulating of interstate commerce.

I corrected him on rights versus powers and he said he didn’t know the difference.

Wow, just wow. He thinks mandated health care falls under the regulation of interstate commerce? I think that justification was lost on nearly everyone in the room. After this and my little email exchange with Senator Patty Murray how can a “progressive” claim to have any concern for the BOR or the constitution? How can they claim to have any principles?

Quote of the day–Martin Armstrong

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Most of the central banks have a lot of PHDs, with no real world experience. They have read books, but have not been in the trench to “feel” what it is truly like. This is why government employees rarely have anything worthwhile that will ever contribute to society. There is not a single economic statistic that is even valid, no less any plausible guide as to what is going on. There are manipulated so much to try and influence the “public confidence” that it becomes a joke.

Martin Armstrong
July 10, 2009
The Goldman Sachs Conspiracy. The Real Dark Pool. Page 4.
[Sent to me by Chet with the comment, “Tinfoil Hat needed?”

I told him my hat was double lined already.–Joe]

Quote of the day–Dmitry Orlov

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Food. Shelter. Transportation. Security. Security is very important. Maintaining order and public safety requires discipline, and maintaining discipline, for a lot of people, requires the threat of force. This means that people must be ready to come to each other’s defense, take responsibility for each other, and do what’s right. Right now, security is provided by a number of bloated, bureaucratic, ineffectual institutions, which inspire more anger and despondency than discipline, and dispense not so much violence as ill treatment. That is why we have the world’s highest prison population. They are supposedly there to protect people from each other, but in reality their mission is not even to provide security; it is to safeguard property, and those who own it. Once these institutions run out of resources, there will be a period of upheaval, but in the end people will be forced to learn to deal with each other face to face, and Justice will once again become a personal virtue rather than a federal department.

Dmitry Orlov
February 13, 2009
Social Collapse Best Practices

Managing Us Verses Protecting Our Rights – mutually exclusive concepts

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This is for J H.  He and Joe were discussing statistics related to gun restriction in comments here.

This line of argument, taken by itself, is to say nothing of human rights, the right to live being most fundamental and the right to self defense going hand in hand with the right to live.

If we are to leave out any discussion of rights, and focus purely on how people get injured or how they die in accidents and crimes as a means of determining and justifying laws, then we’d start by banning the wheel.  Swimming pools, access to rivers and lakes, etc., and stairs would be ahead of guns in private hands as a focus of legislative restriction.  Somewhere in between would be legal restrictions on unprotected sex and leaving the home while ill.  But that would be government thinking of the people in the same way that a farmer thinks of his cattle.

It is when we look at guns in the hands of governments that we find mass death, numbering in the tens of millions, and there you find the primary purpose of our second amendment– defense or deterrence against tyranny, or more to the point it should be seen as defense of human rights by those who hold those rights (we the people).  Who then should look at whom as property?  Keeping our servants in government (our cattle) properly de-horned is, historically, the more important concern if we are to have any sort of owner/property relationships with one another.

Once we’ve accepted the Nanny State as the ideal form of government, all bets are off anyway, and arguing figures and statistics alone is to fight the battle on your enemy’s chosen ground.  Even being wrong in their figures, your enemy has won by deciding the terms of battle.  People are in fact injured and killed through the use of or involvement with guns in private hands.  That is a fact.  Hence the Nanny State will find an excuse to restrict them if that’s what they want and if they feel safe in doing it.

The true winning argument is that the state has no legitimate jurisdiction over any behavior or possession that in itself does not violate the rights of other people.  If I have a gun in my pocket I haven’t violated any other person’s rights by that fact alone.  If I haul off and smack someone at random in the head with a baseball bat, it is not the fault of the state for allowing free, un-restricted access to baseball bats.  It is I who would have committed a crime by violating the rights of another person, for which I would rightly be held accountable.  In attempting to restrict generally the access to baseball bats as a result of my crime, the state would be perpetrating tyranny by way of making victims out of innocent persons.  We call that sort of behavior “prior restraint”– restraining someone in some way prior to them having threatened or done anything wrong to anyone.

It is well and good to point out the stupidity of arms restrictions, and how their effects are virtually always counter to the stated goal of making people safer, but those issues are a distant secondary to the issues of human rights.  Otherwise we’d be confiscating automobiles, banning certain sports, et al.  Without human rights as the fundamental principle guiding our policies, the totalitarian state is an inevitability.

Quote of the day–Frederic Bastiat

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Away with the whims of governmental administrators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations!

Frederic Bastiat
[This isn’t the first time I’ve quoted Bastiat see here, here, and here. I really should get a book or two on or by him.

Additional info about Bastiat from Wikipedia:

Bastiat asserted that the only purpose of government is to defend the right of an individual to life, liberty, and property. From this definition, Bastiat concluded that the law cannot defend life, liberty and property if it promotes socialist policies inherently opposed to these very things. In this way, he says, the law is perverted and turned against the thing it is supposed to defend.

Which is entirely consistent with our consititutions and entirely at odds with our governments.

Via Marc Gallagher.–Joe]

I think I see a trend here

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Via an email from Chet:

The source is here.

I’m sure glad the stimulus plan saved 150,000 jobs since February. Just for scale, assuming the claim was true, those alleged 150,000 jobs account for about two widths of the horizontal lines in the above graph–since the beginning of the recession in the middle of 2008 about 6.2 MILLION jobs have been lost. Hence those 150,000 make a difference of about 2.4%.

So the government authorized spending nearly $800 Billion of money they didn’t have and now is considering spending more in a second attempt.

I think I see a trend here–these people just don’t learn, do they?

Quote of the day–Milton Friedman

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The only relevant test of the validity of a hypothesis is comparison of prediction with experience.

Milton Friedman
[Friedman probably was talking about economics but, as I’m sure he knew, the statement is much more broadly applicable than that. Those that would ban or even restrict gun ownership appear to be in denial of or are oblivious to the truth of the statement.–Joe]

Economic modeling tools

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From the Wall Street Journal:

The economic stimulus plan has created or saved 150,000 jobs since its inception in February, a senior White House Budget Office official said Wednesday.

Rob Nabors, the deputy director of the Office of Management and Budget, told a congressional panel that the jobs figure is based on an economic model used by the Obama administration.

I wonder if that was using the same economic model that generated this graph (from Kevin):

At Microsoft when our tools yield results that even a little bit erratic we investigate and fix them. I would suggest the Obama administration examine their tools but I am suspicious the tools involved are producing the results desired by the administration and they see no need to even investigate–let alone fix them.

Vultures?

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Some people call them vultures. I call them capitalists providing a much needed service. It’s no surprise the people calling them vultures are in San Francisco:

The California IOU has become the prey of so-called vulture investors who hope to profit by buying them on the cheap and redeeming them later.

The idea is that “distressed asset investors” (their nicer name) will pay less than face value to mom-and-pop businesses that receive IOUs but need cash immediately to meet payroll or other expenses. Once the IOUs mature on Oct. 2, the investors will cash them in for their full value plus the 3.75 percent interest the state is offering.

They call the IOU “the prey”? What does that make the state of California? Bambi’s mother? The parents of baby seals? In reality the state is the predator. The state contracted for services and/or goods (or taken excess money in taxes then failed to return the excess as promised) and is now failing to live up to the contract. Had they given IOUs to those that had not provided goods and/or services, such as welfare recipients, I would be less harsh in condemning the state. But to receive something of value and then fail to compensate them as agreed is really unacceptable.

But these people see the state fail to live up to its obligations creating countless victims, the capitalists provide relief to the victims, and then they condemn those providing the relief–that is some sort of insanity. Sometimes I have to conclude that Michael Savage is right on at least one point–Liberalism is a Mental Disorder.

The sad part is that the IOUs are, in essence, a new form of currency. I’m certain the state will soon realize this and start offering to pay in IOUs instead of money. The people, knowing they can sell them for 85% (whatever) of face value will ask for IOUs with face value of $118 for every $100 (85% of 118 is ~100) of goods and/or services. The state will, in a sick, perverted, rationalized sort of way, figure their money mostly problems are solved and not cut back on spending. This will drive the state faster and harder into the financial abyss.

Expect that result to be blamed on “vultures” as well.

‘Investment Coordinators’

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You can pick a socialist out of large crowd in about 3.5 to 3.85 seconds.  He’s the one angrily protesting the use of the word “socialist” while simultaneously advocating socialism, while simultaneously trying to sound educated.  That’s quite a trick.  You have to give socialists that much; they can be fairly good at multi tasking and they have been known to work hard.  Loudly advocating stagnation and decay, while strenuously denying it at the same time, all while taking and disposing of other people’s property and money, while compiling massive lists of massive lists of massive sub lists of dos and don’ts for all of us to follow, all under various threats, isn’t easy.  Fighting the revolution and getting the constitution written and ratified was a minor task by comparison.

In comments here, Endif, running full speed and damn the torpedoes into my nets, referred to the federal takeover of banks and automakers (and presumably everything else the government has taken over in whole or in part, from education to agriculture to energy and transportation industries, to drugs, alcohol and gambling, etc., etc., etc., etc.) as “Investment”.

Socialists get all agitated and defensive at the mention of the “S” word.  What is to be done about it?  What term designating state sponsored coercion would they accept as properly defining their belief system?  We know they quit liking the term “Liberal” and they never understood that “Fascist”  applied to them.  You call one of them a Fascist and they’ll take offense, thinking you’re calling them a conservative.  It’s great fun but it doesn’t lead to even a rudimentaqry level of understanding when two people are using the same words but speaking entirely different languages.  They seem to be using “Progressive” less and less too, now that more people know where and when that political term originated.

What’s happening in the U.S. is more akin to Fascism.  It’s all the same to me, or to put it another way; the subtle distinctions between different versions of state sponsored coercion don’t interest me, nor do the distinctions between the Crips and the Bloods.  Nor do I much care what the advocates and practitioners of socialism prefer to be called– I just know what they don’t like being called, and that in itself is interesting.

Tell us which you prefer, Socialists, the word “socialism” or the word “Fascism”.  If you dislike being called a socialist, surely you have some specific preference.  We know you don’t like “Nazi” mainly because you think it too means conservative.  “Moderate” works for me, since moderates are people who have accepted the premises of socialism but aren’t willing to admit it.  “Socialist in denial” is pretty descriptive too, if redundant.  Ooh; how about “Investment Coordinator”?  Hey, I like that.  We can henceforth refer to socialists as Investment Coordinators.  They’ll like that, I bet.  But wait; what would we call real investment coordinators?

On second thought, I’ll keep calling socialists socialists.  We all know what it means, even if socialists try to act like they don’t.

Quote of the day–Dmitry Orlov

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One interesting observation is that once collapse occurs it becomes possible to rent a policeman, either for a special occasion, or generally just to follow someone around. It is even possible to hire a soldier or two, armed with AK-47s, to help you run various errands. Not only is it possible to do such things, it’s often a very good idea, especially if you happen to have something valuable that you don’t want to part with. If you can’t afford their services, then you should try to be friends with them, and to be helpful to them in various ways. Although their demands might seem exorbitant at times, it is still a good idea to do all you can to keep them on your side. For instance, they might at some point insist that you and your family move out to the garage so that they can live in your house. This may be upsetting at first, but then is it really such a good idea for you to live in a big house all by yourselves, with so many armed men running around. It may make sense to station some of them right in your house, so that they have a base of operations from which to maintain a watch and patrol the neighborhood.

Dmitry Orlov
February 13, 2009
Social Collapse Best Practices
[I’d feel a whole lot better about those last two sentences if they had been written by P.J. O’Rourke instead of someone purporting to give serious advise.–Joe]

Women and Guns (and some other stuff)

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I’m just wondering aloud here.  When will we decide that women are regular citizens, instead of treating female shooters as though they are a separate class of citizen?  I understand that there is a perception that women need their own, separate training classes and all that, so they feel comfortable.  Is that condescending to women or am I missing something?  At what point, or under what circumstances, will we be treating female shooters the same as we treat male shooters (within the sport I mean)?

Maybe it’s a dumb question.  Maybe men can’t help but see a woman as something special and maybe that attitude is bound to find its way into our chosen sport.  Maybe some women are so accustomed to being treated differently that they expect it without a lot of thought.

Maybe the question is simply premature.  Any female shooters want to comment on that?  Do you believe you need separate training or separate categories in a competition, and if so, why?  Should there be guns made for girls, and others for the boys and if so, why”  Marketing strategies are beyond the scope of the question.  Hell, maybe it’s all about marketing, in which case, never mind.

I could understand if shooting involved some heavy lifting, but even then we’ve all seen some women who can out-lift some men.  So you want different weight classes, like in wrestling?

Here’s another.  How long is it going to be before the various races of humans are treated the same in general, in the media, and in the courts?  I understand personal preferences, but that’s quite different.  I’m talking socially, politically and legally.  When will I be able to tell a black guy he’s being a fool without being accused of racism, or tell a Mexican woman she’s wrong without her getting in my face on some racial or sex-related tangent?  When will we be able to disagree without changing the subject as a form of crutch?  I really am getting sick and damned tired of this, so I am herein putting my foot down.  Knock off the race and sex defenses.  Some people are using it as a tool and I’m not buying it.  Not at all, and I’m getting right back in your face if you try it with me so don’t even start.

When, or under what exact specified circumstances, will the gun-restriction advocates declare their work done, pack up their tents, and get jobs?  Any time you hear one of them guffaw over the assertion that they won’t quit until all guns are banned, your immediate response must be, “OK, then tell me precisely when or under what circumstances you will stop, declare victory, and find something else to do, ’cause what I see is that any time you get a win, you’re right on to calling for another restriction.  This has been happening for over 70 years, so, you know, we have a pretty undeniable track record here.  Go ahead.  Lay out the circumstances.  I have all day.”

Staying on the title subject;
A problem with saying, “this far and no farther” is you’ve already established that a) you’re willing to give ground, and/or that b) you’ve accepted or granted your opponent’s basic premise(s).  Some things are properly subject to compromise (such as where to go for lunch, assuming you want the company) and others are not (such as basic rights).  When it comes to basic rights, the response it not, “this far and no farther”.  Properly, the response is zero tolerance, same as it would be for a robber or a rapist.  If someone violates your basic rights, they are criminal and it is not incumbent upon you to prove your magnanimity by compromising with them.  You fight to win, then you fight for compensation and restitution, then you fight for justice, assuming your opponent is still breathing.  Few if any in Congress, for example, seem to have a clue how that might happen with regard to their violations of our basic rights.

Capitalist solution to pirates

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I think the Russians are catching on to this capitalism thing:

Pirate Hunting Cruises Being Offered in Russia

Pirate hunting cruises along the African coast are being offered by private yachts in Russia. For £3,500 per day customers can sail along the coast of Somalia at low speed to entice a pirate into attacking.

Former special forces troops are on board to make sure no harm comes to the wealthy punters. If a pirate does take the bait, they are met with machine gun, rocket, and grenade fire. For an extra fee, customers can hire an AK-47 and join in.

[Via an email from son-in-law Caleb.]

I wonder what this means

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From here:

I still haven’t done all the economics reseach I keep meaning to do so I’ll just dump a few quotes from the source and let someone else interpret the data:

To say this situation is unprecedented does not do justice to the word.

Hyperinflation, or even strong inflation predictions in the near term look rather silly in the face of this data unless one is only looking at the printing and not the destruction in credit.

…

Think consumers are about to go on a spending spree after a massive $13.87 trillion collapse in net worth? Think banks are going to start lending with this employment picture and household debt? I don’t and boomer demographics makes the situation even worse. Don’t forget the bleak employment picture. There is no source of jobs.

Those who get hyperinflation out of this picture must be reading the playbook in Bizarro World because it sure is not the playbook here.

Sleep well.

Dead cities

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Via an IM from son James I found out that some cities are excising dead tissue before it becomes gangrenous:

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

…

Flint’s recovery efforts have been helped by a new state law passed a few years ago which allowed local governments to buy up empty properties very cheaply.

They could then knock them down or sell them on to owners who will occupy them. The city wants to specialise in health and education services, both areas which cannot easily be relocated abroad.

The local authority has restored the city’s attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas.

Mr Kildee estimated another 3,000 needed to be demolished, although the city boundaries will remain the same.

Thousands of homes. Wow. That would be quite a ghost town.

Although it seems a little odd in our time it wasn’t all the uncommon, at least in the western United States, for towns to spring up around mines, flourish for many years then be abandoned. For it to happen around some other industry in another age shouldn’t be all the surprising I guess.

Quote of the day–Milton Friedman

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Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.


Milton Friedman
[The Feds are buying debt. Where do you suppose they are getting the money for that? They are printing it.–Joe]

Quote of the day–Dmitry Orlov

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Now, it just so happens that most things that are positives prior to collapse turn out to be negatives once collapse occurs, and vice versa. For instance, prior to collapse having high inventory in a business is bad, because the businesses have to store it and finance it, so they try to have just-in-time inventory. After collapse, high inventory turns out to be very useful, because they can barter it for the things they need, and they can’t easily get more because they don’t have any credit. Prior to collapse, it’s good for a business to have the right level of staffing and an efficient organization. After collapse, what you want is a gigantic, sluggish bureaucracy that can’t unwind operations or lay people off fast enough through sheer bureaucratic foot-dragging. Prior to collapse, what you want is an effective retail segment and good customer service. After collapse, you regret not having an unreliable retail segment, with shortages and long bread lines, because then people would have been forced to learn to shift for themselves instead of standing around waiting for somebody to come and feed them.


Dmitry Orlov
February 13, 2009
Social Collapse Best Practices